Accounting Multiple Choice Question – 18 June 2023

Alex plc’s draft statement of financial position shows the following balances:

• Share capital ordinary shares of £10 each – £100,000
• Share premium reserve – £60,000
• Profit and loss account (credit) – £210,000

During the year Alex plc:

• pays a dividend of £70,000
• makes a bonus issue of 5,000 ordinary shares
• raises a debenture loan of £120,000.

What will be the total of share capital and reserves after these transactions are completed?

Select ONE answer:

1. £250,000
2. £300,000
3. £350,000
4. £420,000

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct – Start position is £100K + £60,k + £210k = £370k then £70k dividend payment (bonus issue no impact Dr Share Premium Cr Share Capital + Debenture Loan no impact Dr Cash Cr NCL)
3. Not correct
4. Not correct

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